Walmart still has a big weakness in its battle against Amazon

Walmart
has set its sights online for growth, beefing up its e-commerce
offerings with quick and free shipping to compete with Amazon.

It still lags behind in one key area, however,
according to analysts at Cowen. The gap in
assortment - the actual products offered by Walmart.com and
Amazon.com - is still too large, Walmart's management noted in
a meeting with the firm.

Currently, Walmart only carries about half of the
best-selling products on Amazon.

Walmart has been trying to close the gap between the
two sites by investing in partnerships to expand its
assortment, but it's been slow going.

But it's still lagging behind in one area: assortment, meaning
the number and quality of the products being sold on Walmart.com,
according to analysts at Cowen.

"Adding the top million SKUs is essential, doable, and critical
to propelling the [Walmart e-commerce] ecosystem, in our view,"
Cowen analysts said in a note to investors.

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Walmart management agreed that the gap of assortment between
Walmart.com and Amazon.com is still too large, Cowen said, noting
that Walmart called expanding assortment a "top priority."

Walmart only carries a little over half - about 55% - of Amazon's
one million best-selling products, Cowen notes. That could mean
that Walmart either doesn't carry many brands or doesn't have
enough depth in some brands for certain categories of products.

That's a problem for Walmart as it tries to lure customers away
from Amazon. Amazon's top one million products account for about
80% of sales on its website, according to Cowen. If Walmart
doesn't have the goods, customers won't be convinced to shop
there, no matter what the shipping offering is or how low the
prices are.